ABSTRACT
This chapter discusses employment protection regulation and the employment-related parts of the social protection system from the perspective of an optimal institutional setting to allow workforce adjustment in relative security without jeopardizing productivity and labour market performance. It reviews the impact of stability/flexibility on productivity and at more length the impact on workers' perception of security, as well as on a series of labour market indicators, mainly for EU15 countries. It examines the need for a new combination of employment security and social security and puts this in the context of the industrial relations systems. The chapter also discusses the implications of these findings for a new framework of protected mobility, which is one possible form of an optimal institutional setting for a globalizing world, at least for the developed world. It provides evidence that there are European countries that have succeeded in transforming the trade-off into a complementarity.
